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Crisis brews over N8bn unpaid advertising debt

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By Princewill Ekwujuru

The advertising industry is enmeshed in controversy over N8billion debt owed by advertisers and media buying agencies, which stakeholders blame on weak regulatory environment.

File: dollars

Advertising agencies (ad agencies) said the huge media debt profile of client companies have been creating some operational challenges, especially those in the out–of–home advertising, electronic and the print media.

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They said the non- payment of the debts comes against the backdrop of promises made last year by all relevant stakeholders to address the challenge of advertising debt in brand management and management of brand business in Nigeria.

The ad agencies pointed out that they are facing acute liquidity crisis largely due to the large sum being owed by the client companies (advertisers).

Vanguard Companies and Markets (C&M) investigation revealed that over N8billion unpaid fees by advertisers, many of whom are multinationals are currently plaguing smooth running of business operations of the media houses and some advertising agencies.

While the agencies and the media houses are believed to have fulfilled their own part of the contractual agreement by executing the contracts, they are now faced with the challenge of getting the clients to honour their part of the contractual agreement by paying for the services that have over–stayed the agreed  grace period of 45 working days for payment.

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The delay in payment, it was gathered was attributed to the sudden non compliance to the existing payment due date of 45 days by multinational companies who are said to be demanding for 180 days to process media invoices before payment is made.

Advertising practitioners and media owners however have decried this request stating that it does not conform to global best practices.

Few years ago, APCON intervened in the advertising debt issue by setting up A Special Committee on Media Debts Issue (ACOMDI).  Members of the committee were drawn from the major sectoral associations, namely ADVAN, AAAN, BON, MIPAN, OAAN and NPAN. Chaired by Alhaji  Ayodele Sulaiman, the committee met to review and submitted reports on media advertising  debts totalling N2billion as at 2007.

However, the debts have grown over the years in part due to weak regulatory environment, encouraged by absence of a governing council for APCON.

The absence of a governing council  for  APCON in the last four years, according to practitioners,  has created a huge gap in its ability to perform  its  regulatory responsibilities. It was gathered that the practice in Nigeria is in contrast to what obtains in South Africa where advertisers are made to pay heavy sanction and financial penalty for defaulting on payment.

Practitioners speak

Mr. Sola Bamgbose, a consultant to a telecom company described the request by the multi-nationals for 180 days of grace to settle the media debt as “uncharitable”. He stated that such a request in this modern day and time negates the true spirit of fairness and justice as some of these companies does not ask consumers of their goods, products and services to come and pay them after 180 days of consumption.

His words: “The request by multinationals to extend 45 days of grace to 180 days before paying their media vendors is uncharitable, unfair and unjust. How will they justify this request when in actual fact they collect money instantly from the consumers of their goods and services?

Do they ask consumers to come and pay for their goods after 180 days of purchase”; he queried.

Speaking in a similar tone, Mr. Kola Ayanwale, a senior advertising professional and Group Managing Director of Centerspread Grey,  said the media debt challenge which has been ageless is now taking a new twist if clients now demand for 180 days.

He stated that such demand cannot be justified while the companies in their home countries don’t do such for the media in their respective countries. He however advised media owners, advertising agencies and other stakeholders to rally in  resolving the ever – rising media debt.

Similarly, Vice – President of Media Independents Association of Nigeria, MIPAN, Mr. Femi Adeusi, said he is yet to know about the 180 days request, but nonetheless decried the undue delay in paying the media, which he attributed to the challenges in the terms of agreements for some of the businesses.

He stated that some business terms and agreements jointly agreed with clients may cause delay in payments. He advised that agencies and media owners should always scrutinize terms before they enter into business terms.

Aside this, Adeusi stated that any media owner, who is aggrieved  with any MIPAN members should not hesitate to approach the Association with proofs of their cases which include contract terms and agreement and also the proof of job performance as well as their written petition.

He also attributed delay in payment to poor job execution or disagreement or failure in full and agreed implementation on media contracts. He then enjoined media owners to be very mindful in the ways they execute and handle clients’ jobs.

Chairman of STB McCann, Sir Steve Omojafor enjoined media owners to jointly write petitions to ADVAN with a view to getting its  buy–in and support of the advertisers umbrella body in requesting members to pay.

Specifically, he condemned the idea of 180 days request by some multinationals, saying that media houses will collapse if care is not taken.

He canvassed a joint industry effort to resolve some of these lingering issues as the industry today is beset with myriads of challenges.

On his part, President of the Outdoor Advertising Association of Nigeria, (OAAN) Mr.Babatunde Adedoyin said the debts owed its members by advertisers have almost grounded the operations of all out–of–home companies in Nigeria.

He said: “There appears to be a deliberate attempt by the multinationals to cripple the operations of OOH with the new talk on 180 days”.

Following the huge debt, he stated that his association has written letters of appeals to some of the companies and their agencies all to no avail. He pleaded that ADVAN and relevant stakeholders should help to appeal to the advertisers and their media buying agencies.

Similarly, Vice President of OAAN, Emmanuel Ajufo said: “No payment has been made this year to our members. It is affecting our cash flow. Things have not been easy for practitioners. What I cannot say now is the extent of the debt owed members of the Association. We are still collating the figures, but the truth is that, it has not been easy.”

ADVAN President, Mrs. Folake Ani – Mumunney stated that the association will do everything possible to encourage debtor members to pay but clarified that the ADVAN Charter does not include enforcement or debt monitoring.

”The association is out to promote cordial relations and business growth amongst other stakeholders. Some of the allegations on indebtedness and the 180 days request by some advertisers are totally new to her as nobody has ever brought such a thing to her notice,” Ani–Mumunney stated.

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